LinkedIn vet turns VC to link Berlin and the Valley

While Berlin’s startup scene is thriving, most of the money funding the growth is coming from overseas. That makes sense: the local venture capital industry is both immature and risk-averse, while those operating from the Valley or London can offer experience and networks as well as cash.

But that doesn’t mean Germany’s investors are just sitting around and accepting their fate. Take Berlin-based Earlybird, which recently set up a $100m seed fund with a focus on the city: it has just made a hire that should make it a lot more competitive. The firm has taken on LinkedIn co-founder Konstantin Guericke as a venture partner based in Silicon Valley, with the aim that he can act as a bridge between the two hubs.

Guericke, who was born in Germany, used to head up LinkedIn’s marketing efforts and was also CEO of VoIP firm Jaxtr. The idea now is for him to work his magic on Earlybird’s Berlin investments, advising them on product and marketing strategy and helping them to break into the U.S. market.

But how much of a chance does a Berlin startup have getting recognised in the Valley?

“Silicon Valley is very meritocratic,” the veteran told me. “Being from another place doesn’t create any advantage or disadvantage. It’s like, ‘What are you trying to do in the world and what traction do you have, and do we feel we can trust you?’. If you’re looking for investment from Sequioia or Greylock or one of those top firms, that definitely matters.”

Feet on the ground

What the big Californian money-people also want is physical presence. It’s all very well for them to throw their money at a German firm, but how do they keep an eye on it and make their voices heard? For Earlybird’s investments, that’s where Guericke comes in.

“Earlybird wants to build globally successful companies,” he said. “But one reason VC firms in Silicon Valley don’t invest in German companies is the issue of where they have their board meetings. I will be acting as the board member on behalf of Earlybird for those companies.”

And according to Guericke, it’s not just a matter of Berlin firms needing to break into the Valley. He pointed to a technical talent shortage in the centre of the tech world, due to stiff competition between giants such as Google and Facebook, and suggested deals could be struck based on the strengths of “the pool of German engineers.”

So why is it that German companies are only really paddling across the pond now? Why does hardly anyone in the Valley know any German software firm apart from SAP? Guericke’s got an interesting theory on that: the country’s too big.

“To some extent, Germany has had both the fortune and misfortune to be a sizeable market,” he explained. “No Israeli wakes up and says, ‘I’m going to build a great internet company for Israelis’. The same is true for Denmark or Finland or Sweden — a lot of companies there start up to operate on a global scale.”